Although the OECD Observer is celebrating its 40th anniversary, the OECD’s roots and the origins of the trade union advisory committee (TUAC) to the OECD go back further, to 1948. This was a time when the industrial nations were creating the arrangements of the post-war global economy – the Bretton Woods institutions, the Marshall Plan and the beginning of European co-operation.
Coming out of the Great Depression and the Second World War, the OECD’s founders wanted a global order in which nations could grow and people could thrive. They regulated currencies while giving nations the space to stimulate growth. They curbed speculation while fostering real investment. They emphasised growth from the inside out and the bottom up – demand-led growth, based upon full employment and rising wages – and they created the mechanisms for greater trade and global development.
The system they created was far from perfect. Much of the world was outside their line of vision. But in the industrial world, we enjoyed 25 years of decent growth and development. And we all grew together – the rich got richer and working families prospered, building the strong middle classes that are the backbone of democracy. That was the environment when the OECD itself was created in its present form.
Now, 40 years on, we once again are present at the creation. Then, the world was emerging from a long night of global depression and war. Today, the world faces a looming nightmare of global deflation. In the 1940s and 1950s, the industrial nations had to create new institutions to revive investment and trade. At the beginning of the 21st century, we must begin to create the institutions to bring the global economy under control, to curb speculation and revive sustainable growth. Just as the founders of the post-war economy had to understand and respond to the causes of global depression and war, it is vital that we understand and respond to the causes of today’s global crisis.
This crisis marks the end of a conservative era that has lasted 25 years. For a quarter of a century, the industrial nations have worshipped at the altar of conservative idols – deregulation, tight money, fiscal austerity. Corporations have been freed from accountability, currencies and speculators liberated from regulation. Financial elites have been empowered, while unions and parliaments have been weakened.
A global market has been forged. It is dominated by a handful of global corporations and banks. Enron and other unfolding corporate scandals in the United States dramatically expose, not just a few bad apples, but the systematic outcome of this deregulated global economy.
The few are prospering, but the many are not. This economy does not work well for working people. In the OECD nations, we experience the effects in different ways. In Europe, the effect is widespread unemployment, particularly among the young. In the United States, jobs are created but with stagnant or declining wages and benefits for the majority of working people – families are working harder and longer simply to keep pace. In Japan, we witness continued and deepening recession.
We should be very clear: advocates of conservative policies got it wrong. Deregulation, they said, might create greater instability, perhaps an occasional crisis to discipline the foolish. But the discipline and insecurity, they promised, would be a small price to pay for the blessings of growth and prosperity offered by the free flow of goods and capital. Now we know the promise was a lie. Crises, as the former World Bank economist Joseph Stiglitz has recently emphasised, have not been occasional and isolated – they have been universal and frequent. Over 100 countries have been scarred by banking and currency crises since 1975, with the frequency and the severity increasing over time. And deregulated financial markets have produced slower, not faster growth, in nations rich and poor, industrial as well as developing.
In the debates over the past quarter-century, labour unions got it right. We warned about the peril of deregulation without accountability. We warned of the folly of sacrificing full employment in a fight against inflation. We warned that without labour rights and environmental protections, a global race to the bottom could bring everyone down. If anything, our warnings were too tempered, our alarms too muted.
The conservative hucksters got things exactly backwards. They thought they had to create rules to unleash capital and build global markets. In fact, the corporations and banks and the revolutions in technology and communications and transport were doing that on their own. The fundamental challenge was to regulate that market, not to deregulate it, to curb speculation, foster real investment, empower workers, make corporations accountable. What should have been the central project of governments was instead left outside the conference room door.
Now the voice of labour must be strengthened, its stance hardened, its perspective sharpened. We need imagination and new ideas. But the principles of reform are clear. The industrial countries must make co-ordinated efforts to jumpstart growth. Bold initiatives are needed to rescue the people most impacted by the crisis. We must curb speculators and foster long-term investment. Corporations must be accountable to all stakeholders. The global trading regime must be grounded on building protection for core labour rights, consumers and the environment.
But being right, while satisfying, is not sufficient. We must be listened to. Labour unions need more than good sense and good statements – they need to back up the pronouncements with pressure, to make our agenda heard in national policy circles.
Workers’ retirement and savings funds own over 20% of all stock in America. As investors, as employees, as consumers and as stewards of our communities, we must demand standards of basic decency and morality from corporations around the world.
As investors, we will no longer tolerate the greed of short-term speculators or corrupt insiders, and we will not tolerate companies that overcompensate executives, cheat their employees, lie to their shareholders, or cook their books – no excuses, no exceptions.
We have to regulate and reform our companies and provide “corporate governance principles” that put people first.
In these circumstances, it is vital that the concerns of working people and our unions be put forth forcefully within government circles, and backed by aggressive and independent political action and education.
We must start anew. The AFL-CIO is joining with the member unions of TUAC to define and fight for a new internationalism – an internationalism grounded in an economy that works for working people. We will stand up for that agenda in international dialogues as well as in national dogfights. Together we can generate the courage, the vigour, the imagination to rebuild a new global order on the ashes of the old. What better mandate for the new millennium?
TUAC (1998), Proceedings of the 50th Anniversary Symposium, Paris.
©OECD Observer No 235, December 2002